Executive Director and General Counsel
Please see this important alert from Grassi Advisors & Accountants detailing a new Federal Reserve facilities -- Main Street New Loan Facility (MSNLF) and Main Street Expanded Loan Facility (MSELF) -- authorized to facilitate $600 billion of lending to small and medium-sized businesses under the CARES Act.
New Emergency Business Loan Options Available
Yesterday, April 9, the Federal Reserve announced the opening of its Main Street New Loan Facility (MSNLF) and Main Street Expanded Loan Facility (MSELF). These facilities are authorized to facilitate a total of $600 billion of lending to small and medium-sized businesses under the Coronavirus Aid, Relief and Economic Security (CARES) Act.
The funds will be provided by eligible lenders. Eligible lenders are U.S. insured depository institutions, U.S. bank holding companies and U.S. savings and loan holding companies.
An eligible borrower is a business that:
∙ has up to 10,000 employees or up to $2.5 billion in 2019 annual revenues,
∙ is created or organized in the U.S. or under the laws of the U.S. with significant operations in and a majority of its employees based in the U.S., and
∙ is not already participating in the Primary Market Corporate Credit Facility, which was established by the Federal Reserve on March 23, 2020 to support credit to employers through new bond and loan issuance.
Eligible borrowers may not participate in both the MSNLF and MSELF.
An eligible MSNLF loan is an unsecured loan made by an eligible lender that was originated on or after April 8, 2020. An eligible MSELF loan is one that originated before April 8, 2020 and has been subsequently upsized.
Eligible loans must have the following terms:
∙ 4-year maturity
∙ Amortization of principal and interest deferred for one year
∙ Adjustable interest rate at the secured overnight financing rate plus 2.5 - 4%
∙ Minimum loan size of $1 million
∙ Maximum size of a MSNLF loan is the lesser of: 1) $25 million or 2) an amount that, when added to the eligible borrower’s existing outstanding and committed but undrawn debt, does not exceed four times the eligible borrower’s 2019 earnings before interest, taxes, depreciation, and amortization (EBITDA)
∙ Maximum size of a MSELF loan is the lesser of: 1) $150 million, 2) 30% of the borrower’s existing outstanding and committed but undrawn bank debt, or 3) an amount that, when added to the borrower’s existing debt, does not exceed six times the borrower’s 2019 EBITDA
∙ Prepayment permitted without penalty
Click the button below to read more about required attestions, loan origination fees and more information on our Emergency Loan Consulting services.
If you have any questions about applying for an emergency business loan under these new facilities, please contact our our Crisis Response and Recovery hotline at 212.223.6216 or [email protected], or Lou Pizzileo, Partner, at 516.336.2455 or [email protected].
For more information:
Lou Pizzileo, CPA